The Real Jobs Report: February 2014

The BLS Monthly Jobs Report for February is out. It’s odd. Though more jobs were created than expected, the unemployment rate still went up unexpectedly, providing further proof that the two most quoted jobs numbers each month – nonfarm job creation and the unemployment rate – don’t mean what they used to.

Total nonfarm jobs came in higher than expected at +175,000 for February. Economists had thought it would be around +150,000 with the unemployment rate remaining unchanged. Instead, the unemployment rate jumped a tick to 6.7 percent instead of down.

This contradiction is usually explained by workers returning to the labor force when the economy begins to improve. In that sense, it’s good news. Officially, the BLS described unemployment this month as “little changed”.

The one thing the BLS never does is explain a drop in the unemployment rate being caused by workers leaving the labor force. Unfortunately, many, if not most, of the unemployment decreases over the last couple years resulted from labor force dropouts.

News reports are cautiously optimistic about job growth later this year when the weather improves.

View from the White House

Jason Furman

February 2014 was the 48th straight month of private-sector job growth, with businesses adding 8.7 million jobs – Jason Furman, White House Chairman of the Council of Economic Advisers, 3/7/2014

The White House painted its usual happy face on things, emphasizing that things will be even better if the president’s budget is adopted by Congress.

Furman identified five “key” points:

The private-sector added 8.7 million jobs in 48 months.

A major snowstorm affecting jobs hit the east coast.

Recent monthly jobs estimates are “a bit less volatile” than under George W. Bush.

It’s Women’s History Month; female unemployment remained steady the last two months.

Industries, professional services, business services and state and local government had a strong February.

The rest of the story…

There are still -1.3 million fewer jobs today than in November of 2007

Here are other sobering facts the White House didn’t report:

Total nonfarm jobs are up +8.0M in 48 months; -700,000 fewer than Furman reports

There are -1.1 million fewer government jobs than in May 2010

There are +3.5 million more Americans unemployed today than in February 2007

Working age population has grown +16.2 million since February 2007

The civilian labor force has grown by only 848 thousand since October 2008

There are -666 thousand fewer Americans with nonfarm jobs today than in January 2008

Labor participation rate – 63 percent – remained steady near its lowest level in over three decades

Employment-population ratio – 58.8 – remained steady near its lowest level in over three decades

Conclusions

The White House Chairman of the Council of Economic Advisers, Jason Furman, makes a cherry-picked +8.7 million more private-sector jobs in 48 months sound mighty good until you look at the big picture.

There are -666 thousand fewer total nonfarm jobs today than before the Great Recession despite that there are +16.2 million more working age Americans. The Labor participation rate and employment-population ratio remain stuck at 30 year lows. U6 unemployment is still at a very high 12.6 percent.

Put lipstick on a pig and it’s still a pig. The United States has been in a jobs depression for six years and it looks like it will be around for a long time to come.

“there are +16.2 million more working age Americans” No, there are not. The population increase is principally among those of retirement age, not “working age.”. If you look at the population of Americans in the peak working age group, i.e. 25-54 years olds, that population has DECLINED by over 900,000 since January 2008. http://data.bls.gov/timeseries/LNU00000060

Despite this decline, and contrary to your statement “Unfortunately, many, if not most, of the unemployment decreases over the last couple years resulted from labor force dropouts,” the labor force has actually INCREASED by 1.7 million since January 2008. http://data.bls.gov/timeseries/LNS11000000

By the way, this labor force growth is about 23,000 per month, which is the number of jobs needed each month to stay even.

The fact is that people (>16 and under 25) and >54 are still considered working age to most observers.

You are correct that the overall raw labor force is up by +1.7M (rounded up from 1.66M)… but that number is only a part of the story… you ignore:
1-The lower Labor participation rate
2-The lower Employment-population ratio
3-The 16.2 million more work-eligible Americans that came along since Feb. 2007

If you accounted for those things you’d realize that many more millions than 1.7M have simply vanished from the workforce. They vanish because the BLS treats dropouts as if they never existed!!! Unfortunately, they do exist and every one of them are suffering because of the bad economy and our persistent jobs depression.

I don’t know where you came up with the 23K, but that is way, WAY low. Even The Fed’s jobs calculator says we need +103,494 to “stay even” as of this month and most economists think that figure is low:http://www.frbatlanta.org/chcs/calculator/

Most people do NOT consider their 95 year old relative in the nursing home “working age” as you do. Also, I can’t understand your use of February 2007 as the baseline from which to measure. The recession started in December 2007. We started losing jobs in February 2008. So a baseline of either November 2007 or January 2008 makes more sense to me.

So over half of the population growth is in the 65+ retirement age group (7.6 million), then the starting to retire group (55-64 years old = 6.4 million), then the student age group (16-24 years old = 1.4 million). As I said before, the prime working age group with that 81.2% LFPR declined by almost a million people since the start of the Great Recession.

I got my 23,000 number by dividing the growth in the labor force of 1.66 million since January 2008 by 73 months. Admittedly it is understated by the 755,000 discouraged workers not counted in that number according to the BLS. So the real number is more like 33,000 per month over the last 6 years. I’m not sure what the Atlanta Fed is doing with their calculator, but it looks wrong unless population demographics are suddenly going to change significantly from what they have been over the last six years. The baby boomers are going to keep retiring as far as I know.

Another way to look at it is that we are 666,000 jobs short of our all time high in January 2008. To this number we add the growth in the labor force of 1,660,000 and the discouraged workers of 755,000, telling us that we are 3.1 million jobs short of full recovery. At the 2.2 million jobs per year growth rate of the last few years, that is a little under 1.5 years of jobs growth.

Like I said… you’d probably disagree with the +16.2M. You did.
You made several – though valid – quite non-Germaine points. ’nuff said.

Your reasoning for 23K jobs a month is off by a half order of magnitude. If the Atlanta Fed’s jobs calculator results and the assessments of the rest of the world doesn’t entice rethinking your logic then there isn’t anything more that can be added to make a difference.

The amount of statistical Gerrymandering some folks apply to push untenable notions about job creation is amazing. For example, the President and WH Chairman of Economics Advisers push a private-sector jobs growth stat every month that misrepresents the true status of jobs in the United States.

The purpose each month of this column is to attempt to fill in pertinent job stat details that the Administration and BLS either ignore or sugar coat. It sometimes overemphasizes the dark side, but voters need to see the dirty underside of the U.S. jobs situation before they will actively pressure politicians for credible efforts to correct it.